Cloud computing both more agile and less expensive

Bernard Golden |
Jan. 27, 2012

In Silicon Valley, the saying "it's a dessert topping and a floor wax" is often used to puncture the pretensions of a product that promises that it can address every need; it's applied to products claiming oxymoronic qualities. For example, the saying would be applied to a product that claimed to perform network management and word processing--two different, mismatched, and disharmonious functionalities.

Once one steps back from the "less filling, tastes great" conflict between agility and cost, the transformational nature of this automation can be examined more clearly. In every other industry in which manual processes have been supplanted by automation, a number of things have occurred:

1. Cost for the good (or service) has dropped. One has only to look at the automobile manufacturing to see how mass production changed the end user pricing of cars. Henry Ford's automation turned cars from a plaything for the rich to a essential of everyday life. The fact is that automation reduces the labor content of a process and pulls cost out of it. Consequently, given cloud computing's automation, you can expect that the overall cost of IT infrastructure will decline, probably quite dramatically. Those who believe that "enterprise" pricing will continue despite the spread of cloud computing are misguided.

2. Incumbent providers have been confronted by the need to adopt the new technology or go out of business. The number of U.S. car manufacturers dropped by 90 percent in the quarter-century after Ford introduced mass production. Only those who could adopt Ford's techniques and compete with him on price survived. This means that every IT organization and service provider should recognize what the future holds and develop a strategy to adapt to it.

3. Demand for the good or service has skyrocketed as it becomes cheaper. Henry Ford sold 15 million Model Ts, a number surpassed only by the Volkswagen Beetle and the Toyota Camry (both of which sold higher numbers in a market probably 50 times greater than the auto industry in Ford's time). This means that cloud computing is going to cause the demand for IT infrastructure to increase enormously. We consistently recommend that IT organizations develop strategic plans that include a "10X" scenario, because--based on historic analogies--IT will soon see an enormously higher volume of demand.

4. Everyday life is transformed by this new, less expensive capability. The organization of American life today would be shocking to a citizen of a century ago. Every dimension of our lives assumes the easy access of mid- to long-distance personal mobility based on the car. We work in suburban office parks, date and marry people who live 50 miles away, think nothing of taking a weekend visit to a museum or amusement park 200 miles away. Once the easy availability and low cost of a technology is available, it is rapidly subsumed into environmental assumptions. With respect to cloud computing, clients are now planning highly scaled, short duration applications to meet temporary business needs--because they understand that inexpensive, easily available (i.e., agile) infrastructure is there for the taking.